Forex Trading, Market News & Technical Analysis

Forex Trading: London Market Wrap

LONDON (MNI) - EURO SUMMARY: Euro-dollar closed in NY Friday at $1.2989after rate recovered off extended lows of $1.2935. The absence of any aggressivecommunication out of the weekend G7, they reaffirmed their commitment to refrainfrom deliberately weakening currencies through monetary policies without makingany reference to recent moves in Japan, and, along with the release of the muchrumoured piece from WSJ Hilsenrath which reported that the FOMC has mapped out astrategy for winding down QE, acted to boost the dollar into Asian trade Monday.Euro-dollar was marked down to $1.2969 at the open, touching an early low of$1.2947 before settling between $1.2960/80 through the balance of the sessiononce Tokyo had opened and acted to quell the early volatility. Rate picked upfresh demand into early Europe, traders noting middle east interest to selldollars across the board, the buying taking the rate up to extended highs of$1.2992 before momentum faded. Rate eased to $1.2975 before getting shoved downto $1.2952 as market reacted to repeat comments from ECB Visco suggestingpossible use of negative deposit rates if the economy was seen needing help. Thedip attracted demand, allowing rate to settle around $1.2970 late morning.

Chart: FXTrek.com

STERLING SUMMARY: Cable closed in NY Friday at $1.5358 after recovering offlows of $1.5315. Rate had been pressed lower through Friday's session, extendingits corrective pullback off recent highs of $1.5589, as the dollar performed ageneral recovery based off improved employment data. Trade in Asia consolidatedFriday's move with dealing contained within a range of $1.5337/66, recoveringoff that range low to trade around $1.5361 into Europe. Euro-sterling wassqueezed lower into early Asia as it reacted to euro-dollar's mark down into thenew session, the rate touching a low of stg0.8440 before bouncing to stg0.8452then settling around stg0.8450 through the session and into Europe. Reportedmiddle eastern dollar sales into Europe provided the early lift that took cablethrough its overnight high before faltering at $1.5381. Rate drifted off thehighs, the stronger pullback in euro-dollar caused by ECB Visco comments onnegative deposit rates (to be used if economically warranted) taking the ratedown to $1.5353, though euro-sterling pressed down to stg0.8432 diverted part ofthe pressure. Cable recovered to $1.5379 but was drifting off again into latemorning trade.

Chart: FXTrek.com

YEN SUMMARY: The weekend G7 meeting concluded without any aggressivecommunication, reaffirming their commitment to refrain from deliberately weakencurrencies via monetary policy. Dollar-yen marked up from its NY Friday close ofY101.62, to bring pressure on the Y102.00 barrier. Fresh demand emerged fromJapanese Interbank/Fund names taking the rate to an extended high of Y102.15into the Tokyo open where the local market met the rise with decent offers.Profit take sales pared light gains, supply from real money/exporters addedweight to Y101.75 and settle in a tight range. Euro-yen lifted to Y132.40 inpre-Tokyo trade, before tracking the dollar to consolidate above Y132.00. Latesupply pressed to Y131.90, with the dollar at Y101.70. Dollar-yen extended thecorrective pullback in early Europe, slipping to Y101.54, before demand frommacro names pared early losses. Euro-yen opened flat flirting around Y132.00before falling sharply to Y131.58 on Visco comments that said if the economyneeds further help, ECB may cut deposit rate to negative territory. The moveddragged dollar-yen lower to Y101.52 before strong support ahead of Y101.50cushioned. Dip demand extended the recovery to Y101.70, euro-yen to Y131.90.

Chart: FXTrek.com

LOOKING AHEAD

Across the Atlantic, the US April Retail and Food Sales numbers arereleased at 1230GMT. Retail sales are forecast to fall 0.3% in April, with motorvehicle growth a bit slower. AAA already reported that gasoline fell slightly inthe month.

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